Key Points
- USDCNH dipped 0.06% to 7.1316 as risk appetite improved in Asia
- PBoC set midpoint at 7.1064, 326 pips stronger than expected
- Markets await U.S. NFP data to gauge Fed rate cut trajectory
The Chinese yuan saw mild gains Friday in both onshore and offshore trading as domestic stocks rebounded from sharp losses and the dollar traded on the back foot.
Our research desk noted that the lack of follow-through on regulatory fears led to a bounce in local markets, which in turn provided some positive spillover effects for the region.
Meanwhile, the People’s Bank of China (PBoC) guided the yuan firmer by setting the daily midpoint at 7.1064, well above market expectations. The offshore yuan (USDCNH) followed suit, trading around 7.1334 by midday in Asia.
The broader dollar drifted lower in anticipation of the U.S. non-farm payrolls (NFP) report due later Friday, which could prove pivotal for Fed rate expectations.
Technical Analysis
The USD/CNH pair is trading at 7.13, edging lower by 0.06% and continuing a downtrend that has been in place since April’s spike to 7.43.
The decline has been steady, with the pair now hovering just above the 7.11 support zone.
Moving averages (5, 10, 30) are aligned bearishly, reinforcing short-term selling pressure, while the MACD remains negative, confirming momentum stays on the downside.
If the 7.11 level breaks decisively, the next potential support lies near 7.05. On the upside, resistance sits at 7.20 and then 7.25, which would need to be reclaimed to signal a shift back to bullish control.
For now, the technical picture leans bearish, and sentiment remains cautious with traders watching closely for signals from Chinese policymakers and US economic releases that could impact capital flows and yuan stability.
Cautious Forecast
A weak NFP read could deepen pressure on the greenback, extending USDCNH’s downtrend toward the 7.10 zone.
However, any hawkish surprise from U.S. jobs data may cap further yuan gains, especially amid lingering macro uncertainty in China.
